, TEST BANK FOR FINANCIAL INSTITUTIONS MANAGEMENT RISK
MANAGEMENT APPROACH 10TH EDITION BY SAUNDERS
Chapter 1 - An Overview of the Changing Financial-Services Sector
Multiple choice questions 2
Fill in the Blank Questions 4
True/False Questions 5
Multiple Choice Questions 7
Chapter 2 - Managing and Pricing Deposit Services 22
Fill in the Blank Questions 22
True/False Questions 26
Multiple Choice Questions 30
Chapter 3 - Lending Policies and Procedures: Managing Credit Risk 48
Fill in the Blank Questions 48
True/False Questions 52
Multiple Choice Questions 56
Chapter 4 - Consumer Loans, Credit Cards, and Rreal Estate Lending 72
Fill in the Blank Questions 72
True/False Questions 77
Multiple Choice Questions 81
Chapter 5 - Lending to Business Firms and Pricing Business Loans 103
Fill in the Blank Questions 103
True/False Questions 108
Multiple Choice Questions 112
Chapter 6 - International Banking and the Future of Banking and
Financial-Services 139
, Fill in the Blank Questions 139
Chapter 1 - An Overview of the Changing Financial-Services Sector
20 MCQS
1.
Which of the following best defines the modern financial-services industry?
a. Narrow specialization in banking
b. Broad convergence of banking, insurance, and securities services
c. Government-controlled credit allocation
d. Institutions limited to deposit-taking activities
Answer: b. Broad convergence of banking, insurance, and securities services
Rationale: Deregulation and financial innovation blurred traditional boundaries,
creating a broad, integrated industry.
2.
What is the primary driver behind the convergence of financial services?
a. Reduced consumer demand
b. Advances in technology and deregulation
c. Decline in international trade
d. Increased reliance on cash
Answer: b. Advances in technology and deregulation
Rationale: Deregulation allowed cross-sector activities, while technology enabled
integrated service delivery.
3.
Which financial institution is often considered the "department store of finance"?
a. Credit unions
b. Community banks
c. Universal banks
d. Thrifts
Answer: c. Universal banks
Rationale: Universal banks offer a wide variety of financial products (loans,
investments, insurance) under one roof.
4.
Which law historically restricted commercial banks from securities activities in the
U.S.?
, a. Glass-Steagall Act
b. Dodd-Frank Act
c. Federal Reserve Act
d. Sarbanes-Oxley Act
Answer: a. Glass-Steagall Act
Rationale: Glass-Steagall (1933) separated commercial and investment banking until
its repeal in 1999.
5.
The repeal of Glass-Steagall was largely achieved through:
a. Gramm-Leach-Bliley Act of 1999
b. Sarbanes-Oxley Act of 2002
c. Dodd-Frank Act of 2010
d. McFadden Act of 1927
Answer: a. Gramm-Leach-Bliley Act of 1999
Rationale: GLBA allowed financial holding companies to combine banking, insurance,
and securities operations.
6.
Which of the following best explains the "shadow banking system"?
a. Traditional banks lending in rural areas
b. Non-bank institutions engaging in credit intermediation
c. Informal local moneylenders
d. Credit unions pooling member deposits
Answer: b. Non-bank institutions engaging in credit intermediation
Rationale: Shadow banking refers to non-depository institutions (hedge funds,
securitization vehicles) performing bank-like roles without regulation.
7.
Which financial-service trend increases systemic risk but expands credit availability?
a. Globalization of markets
b. Shadow banking growth
c. Fintech innovation
d. Consumer protection reforms
Answer: b. Shadow banking growth
Rationale: Shadow banking widens credit supply but operates outside regulatory
safeguards, heightening systemic risk.
MANAGEMENT APPROACH 10TH EDITION BY SAUNDERS
Chapter 1 - An Overview of the Changing Financial-Services Sector
Multiple choice questions 2
Fill in the Blank Questions 4
True/False Questions 5
Multiple Choice Questions 7
Chapter 2 - Managing and Pricing Deposit Services 22
Fill in the Blank Questions 22
True/False Questions 26
Multiple Choice Questions 30
Chapter 3 - Lending Policies and Procedures: Managing Credit Risk 48
Fill in the Blank Questions 48
True/False Questions 52
Multiple Choice Questions 56
Chapter 4 - Consumer Loans, Credit Cards, and Rreal Estate Lending 72
Fill in the Blank Questions 72
True/False Questions 77
Multiple Choice Questions 81
Chapter 5 - Lending to Business Firms and Pricing Business Loans 103
Fill in the Blank Questions 103
True/False Questions 108
Multiple Choice Questions 112
Chapter 6 - International Banking and the Future of Banking and
Financial-Services 139
, Fill in the Blank Questions 139
Chapter 1 - An Overview of the Changing Financial-Services Sector
20 MCQS
1.
Which of the following best defines the modern financial-services industry?
a. Narrow specialization in banking
b. Broad convergence of banking, insurance, and securities services
c. Government-controlled credit allocation
d. Institutions limited to deposit-taking activities
Answer: b. Broad convergence of banking, insurance, and securities services
Rationale: Deregulation and financial innovation blurred traditional boundaries,
creating a broad, integrated industry.
2.
What is the primary driver behind the convergence of financial services?
a. Reduced consumer demand
b. Advances in technology and deregulation
c. Decline in international trade
d. Increased reliance on cash
Answer: b. Advances in technology and deregulation
Rationale: Deregulation allowed cross-sector activities, while technology enabled
integrated service delivery.
3.
Which financial institution is often considered the "department store of finance"?
a. Credit unions
b. Community banks
c. Universal banks
d. Thrifts
Answer: c. Universal banks
Rationale: Universal banks offer a wide variety of financial products (loans,
investments, insurance) under one roof.
4.
Which law historically restricted commercial banks from securities activities in the
U.S.?
, a. Glass-Steagall Act
b. Dodd-Frank Act
c. Federal Reserve Act
d. Sarbanes-Oxley Act
Answer: a. Glass-Steagall Act
Rationale: Glass-Steagall (1933) separated commercial and investment banking until
its repeal in 1999.
5.
The repeal of Glass-Steagall was largely achieved through:
a. Gramm-Leach-Bliley Act of 1999
b. Sarbanes-Oxley Act of 2002
c. Dodd-Frank Act of 2010
d. McFadden Act of 1927
Answer: a. Gramm-Leach-Bliley Act of 1999
Rationale: GLBA allowed financial holding companies to combine banking, insurance,
and securities operations.
6.
Which of the following best explains the "shadow banking system"?
a. Traditional banks lending in rural areas
b. Non-bank institutions engaging in credit intermediation
c. Informal local moneylenders
d. Credit unions pooling member deposits
Answer: b. Non-bank institutions engaging in credit intermediation
Rationale: Shadow banking refers to non-depository institutions (hedge funds,
securitization vehicles) performing bank-like roles without regulation.
7.
Which financial-service trend increases systemic risk but expands credit availability?
a. Globalization of markets
b. Shadow banking growth
c. Fintech innovation
d. Consumer protection reforms
Answer: b. Shadow banking growth
Rationale: Shadow banking widens credit supply but operates outside regulatory
safeguards, heightening systemic risk.
